The Myth of China’s Consumption-Led Growth

DBS’ David Carbon says China risks a middle income trap by consuming rather than saving and investing.

By

David Carbon

December 8, 2015

Consumption-led growth. Consumption-led growth. Consumption-led growth. For the past three years, C-led growth has been the mantra of officials, analysts and investors alike. China needs more C and less I. So why would China scrap the idea of consumption-led growth?

Because it’s a lot of silly nonsense. Since when did consumption ever drive growth? When the industrial revolution took off in the 18th century? When the US laid its railroads and interstate highways in the 19th and 20th? When the Asian Tigers roared in the 20th...